1) The document outlines a three-step strategy for contract manufacturers to capitalize on the growing autonomous vehicles market. The strategy includes building capacity for entry-level ADAS Tier 1 systems, enabling non-ADAS Tier 1 suppliers to enter the ADAS market, and driving down costs for key ADAS components. 2) Autonomous vehicles sales are forecasted to grow significantly between 2015-2030, especially for entry-level systems. This growth creates opportunities for contract manufacturers. 3) Implementing the three-step strategy could generate $2.5 billion in revenue for contract manufacturers from the ADAS market by 2025.

1. Three-Step Strategy for Contract Manufacturers to
Capitalize on Soaring Autonomous Vehicles Market
Autonomous Vehicles Markets Perspective
Will Wu
2017

2. Wu, Peng (Will) | A Three-Step Strategy for Contract Manufacturers to Capitalize on Soaring Autonomous Vehicles Market 2
Advanced Driving Assistive System (ADAS) lays groundwork for all
levels, while driving algorithm and HD map enable the full autonomous
Autonomous Vehicles core technology roadmap 2030
ABS, Anti-lock braking system; ACC, Adaptive cruise control; AEB, Autonomous emergency braking; AFS, Adaptive front lighting system; AHB, Adaptive high beam; BAS, Brake assist system; BSI, Blind-spot information; CCS, Cruise
control system; DSM, Driver status monitoring; EBD, Electronic brake-force distribution; ESC, Electronic stability control; FCW, Forward collision warning; HSA, Hill start assistance; HUD, Head-up display; LCA, Lane centering assistance;
LDW, Lane departure warning; LKA, Lane keeping assistance; MCB, Multi-collision brake; NVA, Night view assist; PAS, Parking assistance system; PPS, Pedestrian protection system; RPA, Rear parking assistance; TCS, Traction control
system; TPMS, Tire pressure monitoring system; TSR, Traffic sign recognition system
Sensor Processors Actuator Connectivity Mapping
• Camera
• Radar
• Lidar
• Ultrasonic
• Electrical
Control Unit
• Motor Control
Unit
• Electronic
braking
• EPS
• Throttle
• V2V/V2I/V2P
(DSRC)
• Embedded
modem
• HD 3D-map
updated
concurrently
Tier 2: Six Core Parts / Enabling Components
Software
• Driving
algorithm
• Information
security
L0
Warning
L1
Single function
L2
Combined
function
L3
Limited
Self-driving
NHTSA Autonomous
Vehicles Level
LDW
HUD
Safety
▪ Collision Avoid
▪ Road Departure
Prevent
▪ Surround Monitor
▪ Night Assist
Convenience
FCW
BSI
L4
Full
Self-driving
TPMS
CCS
AEB
LKA
AFS
TCS
PAS
NVA
EBD
BAS
MCB
ACC
ESC
LCA
PPS
HSA
TSR Combination of hardware and
software, capable of
▪ Detection of curbs
▪ Detection of debris
▪ Active collision avoidance
▪ Active lane change
▪ Trip/route planning
▪ Lane converging
▪ Interchanging driving
Advanced ADAS
Autonomous Driving Algorithm /
Solution
Basic ADAS
Tier 1:
Sub-system
Today 2020 2025 20302015Mass adoption by premium brands->
DSM
ABS
AHB
RPA

3. Wu, Peng (Will) | A Three-Step Strategy for Contract Manufacturers to Capitalize on Soaring Autonomous Vehicles Market 3
Entry level Autonomous Vehicles sextuple to 42M units by 2020,
followed by steady solution mix upgrading towards full automation
Autonomous Vehicles market development forecast 2030 (Light Vehicles)
▪ Gov. support for L1/L2 safety
enhancement
▪ Maturing Sensor and Processor
technologies
▪ Falling cost driven by scale ramping-up
and new tech (e.g., Lidar)
▪ 5G network
▪ L3/4 algorithm
▪ Information security
▪ Infrastructure overhaul for V2I ready
▪ Gov. transportation regulation revamp
▪ Social acceptance
▪ None-autonomous car parc
Catalysts for transition
Detractors against transition
1) J.P. Morgan estimates
Three-phased ADAS adoption development till 2030
World Wide sales of ADAS equipped /
Autonomous Light Vehicles1)
(in Million Units)
8% 42% 58% 65%
L2
L3/4
+8%
+4%
L1
2030
77
36
(47%)
+41%
20
(26%)
13 (21%)
40 (96%)
42
20252015
20
(27%)
7
2020
2 (4%)
63
46
(73%)
4 (6%)
Phase 1
Massive adoption
of entry level ADAS
Phase 2
ADAS mix upgrading
Phase 3
Beginning of
Autonomous transition
+5x
Level
+4x
#% Penetration rate of ADAS/Autonomous System in Light Vehicles
+5x

4. Wu, Peng (Will) | A Three-Step Strategy for Contract Manufacturers to Capitalize on Soaring Autonomous Vehicles Market 4
Three-Step growth strategy to capitalize on soaring L0/1 Tier 1 market
and on the following trend of Tier 2 parts commoditization
ADAS supply chain dynamics 2015 - 2025
▪ L0/L1 ADAS becomes compulsory for value segment, driven by
safety policy in some countries
▪ L2 ADAS serves as differentiation and competitive edge in
Premium segment, although still optional
Phase 1: 2015 – 2020 Massive adoption of ADAS Phase 2: 2020 – 2025 ADAS upgrading
End
Market
Dynamics
Tier 1
Sub-
System
(Hardware)
OEM
Brands
Tier 2
Core
Parts
(Hardware)
Value
segment
Premium
segment
Non - ADAS
supplier
ADAS
supplier
▪ Fine-tune L1/2 car modules
▪ R&D L2/3 ADAS solution, w/ partnership of Tier 1/2
▪ R&D new car modules w/ L0/1 ADAS
▪ Possibility of being acquired by L3/4 Tech players
▪ Ramp-up L0/1 production massively
▪ R&D L2/3 specialized solutions, to lock on OEMs
▪ Pivot into L0/1 by in-house R&D or partnership, and
build up capacity
▪ Acquire L2 pure players, frog-leaping capability gap
Mature tech
(e.g., RADAR)
Maturing tech
(e.g., LIDAR)
▪ Ramp-up L0/1 production massively
▪ Develop L2/3 solutions, jointly with OEM and Tier 1
▪ R&D breakthrough technology to reduce cost and
enhance functionality
▪ Penetrate starting from Premium segment
▪ L0/1 ADAS gets commoditized, with pressure to drive cost down
▪ L2 ADAS gets standardized in premium segment
▪ L3 ADAS gains initial traction by Luxury and up-range Premium
segments, in some countries
▪ Pilot L3 module sales
▪ Optimize L4 modules, maturing proprietary tech eco-system
▪ Optimize L1, focusing on cost down
▪ R&D L2 module, with support from Tier 1
▪ Bet on buy-or-make decision for L3 technology
▪ Drive L0/1/2 cost down
▪ Strengthen presence in L3/4 software content
▪ Make inroad via M&A, targeting at L2/3 solutions
▪ Reduce cost for L1/2 parts
▪ Enhance functionality for L3/4 parts
▪ Ramp-up production due to higher content/volume in L2/3 vehicle
▪ Reduce cost and enhance functionality for higher competitiveness
vs. mature technology
Build capacity for L0/1 ADAS Tier 1
Value offered to customer: A fast,
flexible, and relatively low cost option
for Tier 1 to solve ADAS capacity
issue: >5x volume in 5 years
Contract
Manufacturer
Opportunity
1
1 Enable non-ADAS Tier 1 for L0/1 via
design to manufacturing solution
Value offered to customer: An option
allows for immediately pivoting into
soaring L0/1 ADAS market
2
3
2 Drive L0/1/2 parts cost down
Value offered to customer: a reliable
option for low cost production after
market gets commoditized
3
7.5M 42M 63M
+34.5M +21.0M
Strategicpriority
#M Number of Light Vehicles with ADAS/Autonomous System

5. Wu, Peng (Will) | A Three-Step Strategy for Contract Manufacturers to Capitalize on Soaring Autonomous Vehicles Market 5
$1.6 Billion expected in 2025 from ADAS Tier 1 market,
opportunity initiated by Step 1 and growth driven by Step 2
6.8
16.8
5.6
10.4
5.2
2.0
2.1
2.10.6
10.4
8.4
0.6
4.3
3.0
1.5
1.1
4.2
2.8
0.6
1.4
2.9
0.9
0.8
0.4
0.22.2
10.0
1.5
3.3
10.0
2015
+15.8%
p.a.
+19.1%
p.a.
Denso
Night vision
Mobileye
Bosch
Others (e.g., AEB)
Parking assist
2025
Continental Blind spot detection
Adaptive cruise control/
Traffic jam pilot/
Highway pilot
Autoliv
2015
ADAS T1
Lane depart. Warning
50.0
Delphi
Valeo
1.3
0.8
19.8
Drowsiness detection
Growth3)2020
14.0 24.0
1.2
8.8
Growth2)
26.0
0.8
0.60.3
+24.8%
p.a.
2020
0.5
0.0 0.3
2015
1.6
0.3
2025
26.5% 20.0%
14.5% 7.2%
12.7% 8.3%
17.1% 18.8%
4.0% 7.1%
14.9% 11.8%
2015-
2020
CAGR
2020-
2025
Step 1: : Build
capacity for L0/1
ADAS Tier1:
▪3% of 2015 ADAS
T1 incremental
sales in Phase 1
and 2
1
1) Deutsche Bank and Roland Berger estimate
2) Assume 40% incremental sales is from 2020 ADAS Tier1
3) Assume 40% incremental sales is from 2020 ADAS Tier1, 20% from 2025 ADAS Tier1
ADAS market development forecast 2015 – 2025 (1/2, Tier 1)
ADAS Tier 1 market 2015 – 20251)
(in $B, by segment)
2015 ADAS T1
2020 New ADAS T1
2025 New ADAS T1
Overview strategic initiative
regarding ADAS Tier 1
Focused products
(criteria: sales growth + volume)
▪ Adaptive cruise control / Traffic
jam pilot / Highway pilot
(Phase 1+2)
▪ Fast growing products in others
segment, e.g., AEB (Phase 1+2)
▪ Drowsiness detection (Phase 1)
▪ Blind spot detection (Phase 1)
▪ Parking assist (Phase 1)
Prioritized customers (Step 1)
▪ Bosch, existing relationship
▪ Continental, largest player
▪ Delphi, aggressive L1-3 ADAS
solution developer based in USPhase 1 Phase 2
Step 1: : Enable
non-ADAS Tier1
for L0/1:
▪5% of 2020 and
2025 ADAS T1
incremental sales
in Phase 1 and 2
2
0% 3%2%
Projected XYZ
revenue
(in $B)
#% XYZ market share
21.8% 17.5%
2020 New T1
2015 T1
2025 New T1

6. Wu, Peng (Will) | A Three-Step Strategy for Contract Manufacturers to Capitalize on Soaring Autonomous Vehicles Market 6
$0.9 Billion expected in 2025 from ADAS Tier 2 market,
driven by L1 parts and Cameras
0.1
2020
0.2
+18.3%
p.a.
0.9
0.1
2025
0.5
0.3
0.4
0.1
2015
1) Goldman Sachs estimate
2) J.P. Morgan estimate
ADAS market development forecast 2015 – 2025 (2/2, Tier 2)
ADAS L1/2 per vehicle hardware cost1)
(in $, by key Tier 2 parts)
Overview strategic initiative
regarding ADAS Tier 2
Projected XYZ revenue (in $B)
▪ Core vision system for object recognition,
traffic sign and signal recognition, and path
detection. Available in mono, stereo and
trifocal configurations
Tier 2 players
▪ Long range forward radar systems typically
used to provide range, angle, and Doppler
velocity. Works well at night and in poor
weather
Descriptions
▪ Domain controllers / ECUs used to tie together
multiple electronic sub‐systems, enhancing
communication
▪ The HMI monitors driver status, signals mode
changes, and provides biometric identification
▪ Electrical & Electronic Architecture
▪ Actuation
▪ Embedded modem
Mostly in-house
aggregator
▪ Continental
▪ Delphi
▪ Denso
▪ Valeo
▪ Bosch
▪ TRW
▪ Autoliv
▪ Mobileye
▪ Bosch
▪ Toshiba
▪ Conti
▪ Nvidia
▪ Intel
▪ Infineon
▪ Lemoptix
▪ Luxoft
▪ Tobii
▪ TE/Molex/Nippon
▪ TRW/Bosch
▪ Qualcomm/Intel
Step 3: : Drive L1/2
parts cost down
▪Find below table for
assumptions
3
96
L2
$935
200
$501
150
Radar
130
135
125
100
375
L1
125
Others
HMI
Embedded
controls
Cameras L1 L2 L1 L2
# of LV Vehicles2)
(Million)
40 2 46 13
Radar
Avg. market price 125 375 125 375
Price reduction 10% 10% 30% 20%
XYZ price ($) 112.5 337.5 106.25 300
Market share 2% 1% 5% 2%
Cameras
Avg. market price 150 200 150 200
Price reduction 10% 10% 30% 20%
XYZ price ($) 135 180 127.5 160
Market share 5% 2% 10% 5%
L1 - Radar
L2 - Cameras
L1 - Cameras
L2 - Radar

7. Wu, Peng (Will) | A Three-Step Strategy for Contract Manufacturers to Capitalize on Soaring Autonomous Vehicles Market 7
▪ Huge car parc anticipating entry level
ADAS to improve driving experience
▪ Opportunities in L0 aftermarket ADAS
kit, mainly in driving warning and parking
assistance
▪ Infrastructure overhaul to allow for L3/4
introduces opportunities in Road Side
Unit, such as traffic control system, road
side camera and radar
▪ Normally different from system
integrators for On Board Unit
$2.5 Billion from ADAS market by 2025 through Three-Step Strategy,
with upside potentials exit in Truck, Aftermarket, V2I and 48V
0.3
0.3
0.6
0.3
0.8
1.1
0.4
0.5
0.9
V2I
Upside
2.5+
AFTM
Upside
Base
48V
Truck
Growth
2.5
2025
Stretch
2025 Base2020
0.9
1.6
+22.4%
p.a.
XYZ’s strategy entering ADAS market and financial impact
Step 1: : Build capacity for L0/1 ADAS Tier 1
Rationale
▪ Leveraging existing capability in electronics
▪ Gain L0/1 ADAS know-how
▪ Potentially higher margin
Target customers
▪ Bosch / Continental / Delphi
Focus products
▪ Adaptive cruise control / Traffic jam pilot /
Highway pilot (Phase 1+2)
▪ Fast growing products in others segment,
e.g., AEB (Phase 1+2)
▪ Blind spot detection (Phase 1)
▪ Parking assist (Phase 1)
1
Step 3: : Drive L1/2 parts cost down
Rationale
▪ Leveraging capability in sensor manufacturing
▪ Entering large and growing parts market
Focus products
▪ Radar, due to large weight in cost structure
▪ Cameras, due to large weight in cost structure
3
Step 1: : Enable non-ADAS Tier 1 for L0/1
Rationale
▪ High margin by offering complete solution
▪ Showcasing XYZ ADAS capability for OEM
direct business
Target customers
▪ Non-ADAS Tier1 who want to pivot into ADAS
2
1
2
3
Projected XYZ revenue development
(in $B)
A
B
C
▪ Traveling mostly on highway or defined
route, trucks will adopt L2/3 ADAS
earlier than light vehicles
▪ Opportunities in specialized ADAS for
 Industry zone shuttle truck
 Mining truck
 Commercial long-haul trucking
Upside opportunities briefing
A
B
C
▪ Having more electronics devices on the
car, conventional 12V electrical
architecture has not enough power
▪ Dual battery solution (12V lead acid/48V
lithium ion) has been introduced by
Johnson Controls and Delphi
D
D

8. Thank You
Autonomous Vehicles Markets Perspective

9. Wu, Peng (Will) | A Three-Step Strategy for Contract Manufacturers to Capitalize on Soaring Autonomous Vehicles Market 9
Appendix 1 – NHTSA Level and Glossary
ABS Anti-lock braking system
ACC Adaptive cruise control
AEB Autonomous emergency braking
AFS Adaptive front lighting system
AHB Adaptive high beam
BAS Brake assist system
BSM Blind-spot monitoring
CCS Cruise control system
DSM Driver status monitoring
EBD Electronic brake force distribution
ESC Electronic stability control
FCW/RCW Forward/Rear collision warning
HSA Hill start assistance
HUD Head-up display
LCA Lane centering assistance
LDW Lane departure warning
LKA Lane keeping assistance
MCB Multi-collision brake
NVA Night view assist
PAS Parking assistance system
PPS Pedestrian protection system
RPA Rear parking assistance
TCS Traction control system
TPMS Tire pressure monitoring system
TRS Traffic sign recognition system
Glossary

10. Wu, Peng (Will) | A Three-Step Strategy for Contract Manufacturers to Capitalize on Soaring Autonomous Vehicles Market 10
Appendix 2 – J.P. Morgan OEM Industry ADAS Penetration Model

11. Wu, Peng (Will) | A Three-Step Strategy for Contract Manufacturers to Capitalize on Soaring Autonomous Vehicles Market 11
Appendix 3 – Building blocks of autonomy

12. Wu, Peng (Will) | A Three-Step Strategy for Contract Manufacturers to Capitalize on Soaring Autonomous Vehicles Market 12
Appendix 4 – Auto OEM and components for ADAS function

13. Wu, Peng (Will) | A Three-Step Strategy for Contract Manufacturers to Capitalize on Soaring Autonomous Vehicles Market 13
Appendix 5 – Auto component supplier’s capacity

14. Wu, Peng (Will) | A Three-Step Strategy for Contract Manufacturers to Capitalize on Soaring Autonomous Vehicles Market 14
Appendix 6 – Sensor technology for Autonomous (1/2)

15. Wu, Peng (Will) | A Three-Step Strategy for Contract Manufacturers to Capitalize on Soaring Autonomous Vehicles Market 15
Appendix 7 – Sensor technology for Autonomous (2/2)